In years prior to 2020, owner-only businesses had to establish / adopt the self-directed solo 401k by their business year end which was December 31 for most businesses.
This all changed for the better, however, for future tax years starting with 2020 due to the passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which is part of the Further Consolidated Appropriations Act, 2020 (FCAA) and President Trump made law in late December 2019. Thanks to the new law, owner-only employers can now adopt the solo 401k plan by their business tax return due date plus business tax return extensions. Basically, the solo 401k plan establishment deadline is now based on the business tax return due date instead of the business tax year end.
Entity Type is a Sole Proprietorship or C-corporation
For example, if your self-employed business entity type is a sole proprietorship or C-corporation, and you want to establish a solo 401k plan for the 2020 tax year, you can wait to open the solo 401k plan by October 15, 2021.
Entity Type is a Partnership or S-corporation
If your self-employed business is a partnership or S-corporation, the 2020 solo 401k plan establishment deadline is September 15, 2021.
The purpose of this extension to open the solo 401k plan is to give owner-only businesses more time to determine if a solo 401k plan is right form them. The increased deadline to open a solo 401k plan now aligns with the SEP IRA establishment deadline.